Healthcare Technology Featured Article

December 21, 2012

Implementing the ACA with HIT

Now that the election is over, people are taking stock of the healthcare agenda for Congress, the Obama administration and the states. The centerpiece is the Affordable Care Act (ACA). This massive law is poised to redo the foundational building blocks of our healthcare system and how it is paid for. It’ll be tough to get the pieces up and running, create reporting mechanisms and generate the necessary cost savings.

Without a doubt, though, stakeholders will need health information technology (HIT) to meet the requirements.

Playing the hand that’s been dealt

The election results mean the ACA is going to survive pretty much intact despite last year’s numerous attempts to deep-six it. But it’s not over. We are now likely to see piecemeal repeal where possible, use of the House majority to investigate ACA implementation and gum up the works, and the use of budget negotiations to kill off certain provisions.

However congressional actions and the budget negotiations turn out, the ACA’s major provisions should remain as passed. These provisions will require significant HIT investment by payers and providers. So now the federal legislators, state governors and stakeholders will roll up their sleeves to get them implemented. These provisions include:

Health insurance exchanges. A key element of the health reform law requires states to have online health insurance exchanges (HIXs), which will use HIT to facilitate the enrollment of some nine million uninsured Americans in commercial plans. These must have a federally determined "essential benefit package" comparable to employer-sponsored plans, with four different levels of cost sharing. The HIXs must be up and running in 2014, with or without government assistance. How that participation will ultimately break down is unclear at this point, but we do know it will depend on geography, politics and costs.

For example, operating costs are always a consideration; consequently, HIT will be needed to help control those costs and create administrative efficiencies. Florida estimates $92 million will be needed to start up, with another $50 million to $80 million annually in operating funds. Private exchanges are also springing up in response to the market demand created by the ACA, although they are not specifically mandated by the law. They primarily target employers and go beyond medical insurance to offer coverage for dental, vision, life and disability, for example.

These HIXs will end up dealing with millions of people for their health insurance needs.

Medicaid expansion. Most states are expected to expand their Medicaid program, which is now an optional ACA requirement due to a Supreme Court ruling earlier this year. Expanding Medicaid in every state would add 21.3 million people, including 14.3 million who will be newly eligible for the program and 7 million who already are entitled to benefits but haven't signed up. New entrants would include those living below or near the poverty line and adults who are dually eligible for Medicare and Medicaid. The extent of expansion is very fluid and uncertain at this point. (The Advisory Board is keeping an updated tally.) Most holdout states are balancing improvements against costs. Many are expected to cave because a lot of money is at stake in the form of increased federal subsidies and most states are cash poor.

Others may decline because of politics or they believe they will be unable to afford their share down the line despite generous federal subsidies.

ACOs. The ACA calls for the creation of Medicare accountable care organizations (ACOs), which are networks of providers and payers working together and sharing risk while improving the quality of healthcare services, reducing costs, and being reimbursed according to their performance. Private insurers also are jumping on the ACO bandwagon. ACOs come in multiple, varied models and typically include some combination of hospital system, physician organizations, payers and sometimes not-for-profit, community-based organizations.

According to a recent report, the ACO market is exploding. More than 150 Medicare ACOs have already been approved and several hundred more applications have been received for the next Medicare ACO start date, which is January 1, 2013. These are led primarily by hospitals and physicians. An estimated 150 commercial ACOs are operating as well, primarily led by health plans. Health plans are heading toward 100 percent participation in ACOs, according to a new study, with 78 percent of respondents already participating and 22 percent planning to participate.

Quality reporting. The ACA requires health plans to report their activities regarding plan or coverage benefits and provider reimbursement structures that improve health outcomes, prevent hospital readmissions, improve patient safety and reduce medical errors, and implement wellness and health promotion activities. Performance will be assessed through an increasing array of standardized performance measures assessing preventive care, clinical processes and intermediate outcomes (e.g., blood pressure or cholesterol levels) as well as care experiences and outcomes (e.g., functional status). Some of these measures will evolve; others are already being used in Medicare Advantage plans and for accreditation by the National Committee for Quality Assurance, among others.

Impact on HIT. Needless to say, the ACA is creating a sea of change in how we look at healthcare going forward and the ways it is delivered and paid for. This will create new HIT requirements by stakeholders. For example:

Health plans. ACA implementation will create numerous challenges and opportunities for health plans, all of which will lead to a scramble for HIT. They will have to figure out how to deal with a flood of new members who were outside of their past membership profile because many of the incoming members are more vulnerable, have many chronic conditions and are more costly to treat. This will change plans’ strategies and HIT infrastructure to enroll members through HIXs and significantly alter the ways they reach out to members once they are enrolled and monitor their progress. To do this, for example, payers will need state-of-the-art administrative systems. Because population health will be critically important, new kinds of HIT also will be needed for easy, accurate and upfront processing of prospective members’ eligibility and demographics. Web-based health risk assessments, predictive analytics and patient outreach using telehealth applications will be key.

Because of the HIXs, plans will be more similar than not, necessitating differentiation based on costs and services. HIT will be needed to support smooth switching between plans, especially between Medicaid and subsidized plans. Plans also will have to use HIT to enhance the patient experience, a new area on which they will be judged for reimbursement purposes. Medicare ACO regulations contain several quality measures requiring the capture of patient satisfaction scores. This will require an easy-to-use, Web-based application for efficiency, accuracy and cost effectiveness.

Plans will also need to look to quality improvement activities to help meet ACA medical loss ratio (MLR) requirements. If plans do not meet these requirements, they must provide rebates to members. More than $1 billion in rebates were distributed so far in 2012 in response to regulations that went into effect last year. Plans can avoid giving rebates by investing in electronic health records (EHRs), health information exchange and patient portals, which enhance the MLR numerator. HIT-related investments in administrative efficiency also indirectly improve the MLR by reducing administrative expenses.

In short, both actions work to optimize a health plan’s MLR.

Health plans also have the opportunity to help hospital- and physician-led ACOs with their HIT needs. Some apparently are already helping provider organizations to gear up without large-scale capital investment. For example, some plans are subsidizing the cost of HIT, supplying data on hospital admissions of ACO patients, doing predictive modeling on illness patterns and even providing care coordinators.

With this kind of help, ACOs can initially avoid large, expensive HIT and care management systems and still meet savings and quality targets. However, more sophisticated, capital-intensive systems likely will be needed down the line.

Providers. ACA implementation also will create challenges and opportunities for providers. The tsunami of newly insured coupled with a chronic disease epidemic will worsen the already predicted shortage of physicians, pharmacists and nurses. HIT applications, such as clinical decision support, will be needed to better enable a range of providers with varying skill sets to treat patients and help them manage their conditions. These kinds of HIT applications will allow a slower-growing complement of clinicians to treat a greater volume of sicker patients.

Providers also will need to use their HIT infrastructure and EHRs to create and send required quality reports. These systems also will be key to monitoring their own progress so they can stay on track to achieve cost and quality targets. If the rumor mill is accurate, hospitals and community health centers, in particular, are likely to need HIT systems that link to Medicaid to make “presumptive eligibility” determinations for patients, and help channel them to other programs for which they are eligible.

ACOs. In order to meet their cost and outcome targets, minimize shared risk and maximize shared savings, ACOs will depend heavily on HIT and an HIT infrastructure. These will be needed, for example, to facilitate population health and chronic care management as well as provide clinical decision support, business intelligence and predictive analytics. In addition, a new generation of revenue cycle management will be needed. This must be designed to support risk-based contracts based on quality and cost measures, bundled payments, and payment distribution across multiple provider organizations. HIT will also be needed to share administrative, clinical and claims data across multiple providers to support those functions. Robust care coordination applications that enable sharing of data among providers during care transitions as well as secure provider-provider and patient-provider communications will also be required.

ACOs also will have to meet HIT challenges by incorporating new providers into existing HIT networks or expanding and morphing their networks to accommodate new entrants. ACOs will require new kinds of HIT applications to report on quality and population health, as well as better manage the chronically ill.

States. Regardless of how many states participate in Medicaid expansion, it is clear there will be a huge influx of beneficiaries and dual-eligibles into state Medicaid programs. Enrollment churning also is likely as people go on and off Medicaid while the dust settles with the individual coverages available on the exchanges. This could severely strain the aging and already inadequate Medicaid HIT infrastructure. The ACA also calls for improved eligibility and enrollment processes that coordinate with the new insurance exchanges to enroll Medicaid-eligible people seeking coverage. This means states will need new HIT strategies and systems that connect with the exchanges and private insurers.

With respect to health insurance exchanges, states that have not decided how they will participate or have not locked in a vendor may not be able to meet implementation deadlines or even advise the government next summer of their readiness.

This is due to the limited number of vendors that will not have the capacity to meet a large-scale rush to go live with the exchanges.

Vendors. Vendors also will be hard pressed to adapt or develop all the HIT products needed for stakeholders to implement the ACA, especially given the tight implementation timelines. As mentioned previously, there are only a handful of vendors that are ready and able to stand up HIXs in time to meet implementation time frames. Moreover, HIT applications that meet ACA requirements go far beyond the meaningful use criteria. In addition to universal interoperability, the ACA requires patient registries, medication management (adherence, etc.) and real-time quality measurements so vendors’ ACO and provider customers can achieve performance standards. As HIT becomes increasingly embedded in clinical decision making, vendors will be under greater pressure and possibly regulation to monitor safety of the technology. Some government guidance undoubtedly is forthcoming, but perhaps not enough for vendors’ comfort level.

Of course, privacy and security requirements must be baked in as well.

The bottom line. There’s a lot of work to do in a short time. The lesson for stakeholders is one of HIT Darwinism: those that don’t have their act together and adapt will become extinct very quickly. This will require an “all hands on deck” effort by stakeholders to boldly go where they have not gone before in terms of products and HIT infrastructure.